Essay on Business-Level Strategy

5122 Words May 11th, 2016 21 Pages
BUSINESS-LEVEL STRATEGY
By Alan S. Gutterman 1
Abstract
Growth is a key goal and objective for emerging companies and management must carefully determine the best way to combine the core competencies within a firm’s functional departments to provide the firm with the best opportunity for achieving and sustaining a competitive advantage in its chosen environment. This report focuses on the process of setting business level-strategy, which includes (1) selecting the domain(s) in which the firm will be competing for scarce resources (e.g., capital, personnel, technology, inputs and customers) and (2) positioning the firm in each chosen domain so that its function-based core competencies are most effectively leveraged to establish a
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The material in this report will appear in Organizational Management and
Administration: A Guide for Managers and Professionals by Dr. Alan S. Gutterman and is presented with permission of Thomson Reuters/West. Copyright 2011 Thomson
Reuters/West. For more information or to order call 1-800-762-5272. Dr. Gutterman is the Director of the Center for Management of Emerging Companies
[www.managingemergingcompanies.org].
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G. Jones, Organizational theory, design and change (5 th Ed.) (Upper Saddle River, N.J.:
Pearson/Prentice Hall, 2007). See also M.E. Porter, Competitive Strategy (New York:
The Free Press, 1980), Chapter 2.
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Steps for Creation of the Business-Level Strategy

As discussed above, companies can create a core competency at the functional level either by reducing the costs of performing the value-creation activities that occur within the function (“low cost advantage”) or performing the value-creation activities that occur within the function to differentiate its products from those offered by competitors in a way that customers perceive as having value (“differentiation advantage”). Creation of a business-level strategy builds on functional-level strategies and involves two steps: (1) selecting the domain(s) in

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